L0 Banking

1. A brokerage or analyst report will contain all of the following except?

a. Detailed description of the company, and its industry.
b. Opinion on why the analyst believes the company will succeed or fail.
c. Recommendations to buy, sell, or hold the company.
d. Target price or performance prediction for the stock in a year.
e. Track record of the analyst writing the report.
2. 2 Marks
One should have the MMDA if one is looking for _______________________.
a. Quick, convenient and, frequent-access to the money
b. A high rate of interest
c. Guaranteed rate of interest
d. Low fee
e. None of the listed Options
3. 2 Marks
______________ for securities lending, which bring lenders and borrowers together,
may eliminate _______________.
a. Wholesale intermediaries; Niche intermediaries
b. Internet auction systems; custodian and third party intermediaries
c. Custodian and third party intermediaries: Niche intermediaries
d. Niche intermediaries; custodian and third party intermediaries
e. Internet auction systems; Niche intermediaries
4. 2 Marks
Money laundering can best be described as the process by which
____________________________________________.
a. money gained from criminal activity is processed so it appears to be gained from
legitimate sources
b. criminals attempt to defraud the government
c. money gained from legitimate sources is hidden to avoid taxes
d. the police attempt to investigate organized crime
e. None of the listed Options
5. 3 MarksA U.S. importer who has agreed to pay 1 million Euros to a French exporter in
60 days decides to wait the full 60 days before paying. The importer is
______________________.
a. a foreign exchange speculator
b. expecting the dollar to depreciate against the Euro
c. a hedger in the foreign exchange market
d. planning to pay a set amount of dollars for the items purchase

e. None of the listed Options

6. 1 Marks
The term POP stands for?
a. Private Offer Price
b. Private Option Price
c. Public Offer Price
d. Public Option Price
e. Potential Offer Price
7. 1 Marks
Continuous Linked Settlement removes which of the following risks primarily
a. Exchange risk
b. Temporal risk
c. Country risk
d. All of the listed options
e. None of the listed Options
8. 2 Marks
Which of the following is correct with reference to Indian banks?
a. Indian banks are unregulated
b. Saraswat Bank is the largest Indian bank
c. Reserve Bank of India regulates the Indian banks
d. Indian banks cannot open branches outside of India
e. India's banking system is one of the weakest in the world
9. 1 Marks
EFT stands for _______________.
a. Express Funds Transfer
b. Electrical Funds Transfer-+
c. Elevated Funds Transfer
d. Emergency Funds Transfer
e.Electronic Funds Transfer
10. 1 Marks
Banks are financial intermediaries that ____________________.
a. link lenders (depositors) to borrowers
b. have been in existence now for over 50000 years
c. are not required
d. cause problems as their sales reps keep calling people to buy new products
e. should not be allowed to open Savings Accounts
11Which of the following is not a type of Swap?
Answer:a. Currency Swap'
b. Forward Swap
c. Swaption
d. Interest Rate

12 Forfeiture regulation under the US patriot act allows

_____________________________
Answer: a. permits confiscation of any property derived from or used to facilitate
domestic or international terrorism
b. Calls for the seizure of correspondent accounts held in foreign financial institutions for
domestic banks who are in turn holding forfeitable assets
c. Permits foreign enforcement of domestic forfeiture orders
d. All of the listed options
e. None of the listed Options
13.Annual Percentage Rate for a loan takes into account the following?
Answer:
a. The interest rate charged
b. When and how often the interest must be paid
c. Other charges such as arrangement fee
d. When and how often these other charges must be paid
e. All of the listed options
14.A young investor comes to an Investment Consultant and asks him for advice for his
investments. He declares that he doesnt mind the risk but he would definitely like his
money to grow as fast as possible. He would like to invest in a Mutual Fund which would
satisfy these criteria. What would the consultants choice for his profile?
Answer:
a. Income Fund
b. Liquid Fund
c. Growth Fund
d. Balanced Fund
e. Bank Deposit
15ABC corporation is a large client of BankNew and maintains $40 million in cash with
the bank.
BankNew however allows authorized representatives off ABC to write checks up to 10%
over the balance maintained. This is an example of
____________________________________.
Answer:
a. Overdraft
b. Accrual Loan
c. Held for Sale Loans
d. Undrawn Loan
e. Committed Loans
16.Which of the following is associated with the purpose of regulating financial
institutions?

a. To ensure everyone makes money in the market

b. To ensure companies can cheat small investors in buying their securities
c. To prevent failure of any financial institution
d. To ensure that various government departments can be created for regulation thus
giving employment to many people
e. All of the listed options
17. Which of the following is true about Retail Banking business?
Answer:
a. The business focuses on small number of high net worth individuals
b. The business focuses on large number of individuals each of whom may have a
small amount of money to deposit with the Bank
c. The business focuses on large corporate bodies
d. The business focuses on small and medium enterprises
e. The business focuses on giving financial advice to customers to generate maximum
returns on their investments
18.What is the best basis for the comparison of dividend paying stocks with other
investments such as bonds, certificates of deposits etc?
Answer:
a. Interest spread
b. Exchange rate
c. Interest rate
d. Equity yield
e. Dividend yield
19. Corporate Loans are ___________________________________
Answer:
a. always secured
b. secured or unsecured
c. never secured
d. always unsecured
e. None of the listed Options
20. Services like the settlement, safekeeping, and reporting of customers marketable
securities and cash are provided by _________________.
Answer:
a. Custodian
b. Broker
c. Investment bank
d. Fund Administrator
e. Dealer
21. CRR stands for which of the following?
Answer:

a. Cash Reserve Ratio

b. Common Reserve Ratio
c. Cash Refund Ratio
d. Cash Re-service Ratio
e. Cash Reserve Risk
22 1 Marks
The term CLS stands for
Answer:
a. Cautious Linked Settlement
b.Continuous Linked Settlement
c. Competitive Linked Settlement
d. Comparitive Linked Settlement
e. Clearing Linked Settlement
23.1 Marks
Which of the following is not a risk management measure?
Answer:
a. Diversification
b. Hedging
c. Insurance
d. Budgeting
e. All are risk management techniques
24 2 Marks
The quote for CTSH in NASDAQ was $ 43. The best buyer was at $ 42.5 and the best
seller at $ 43.5.</p><p> How much is the bid-ask spread?
Answer:
a. $0.50
b. ($0.50)
c. $1.00
d. ($1.00)
e. $86
25 1 Marks
The easiest way to calculate IRR
is________________________________________________.
Answer:
a. writing a Java program with 100 FPs
b. using MS-Excel
c. using a supercomputer
d. using a 2GHz processor
e. writing JCLs running on a powerful Mainframe
26 3 Marks

You invest Rs.5000 at 10% p.a. compound interest compounded annually in a bank. After
2 years, what is the amount you have received from the bank?
Answer:
a. Rs. 12346
b. Rs. 7000
c. Rs. 2346
d.Rs. 6050
e. Rs. 7546
27 1 Marks
The central bank in the US is called ________________.
Answer:
a. Federal Reserve
b. Federal Reserve Board
c. Reserve Bank of United States
d. Central Bank of United States
e. Reserve Bank of America
28 ABC corporation is a large client of BankNew. BankNew extends a loan to XYZ
corporation which is a supplier of ABC. This is an example of
_______________________.
Answer:
a. Bill Discounting
b.Supplier Loan
c. Asset Securitization Loan
d. Working Capital Loan
e. Revolving Line of Credit
29 2 Marks
The act of a loan amount being handed over to the borrower by the Bank is know as?
Answer:
a. Disbursement
b. Distribution
c. Displacement
d. Dispersement
e. Diversification
30 1 Marks
Momentum investing would refer to ___________________________.
Answer:
a. follow fundamental financial ratios to make decisions
b. invest in high dividend yield stocks
c. following charts and indicators to trade

d. create portfolio similar to index

e. try best to market
31 3 Marks
Private clients trade in ____________ volumes and ___________ fees and commissions.
Answer:
a. larger; larger
b. small; larger
c. small; small
d. larger; small
e. Either small; larger or larger; small
32 1 Marks
Bid-Ask spread refers to ________________________________.
Answer:a. difference in price between buying one asset and another similar one
b. difference in opinion between the seller and buyer on the price of an asset
c. difference between the buying and selling price of the same asset
d. both difference in price between buying one asset and another similar one and
difference in opinion between the seller and buyer on the price of an asset
e. None of the listed Options
33 1 Marks
The process in which a privately held company offers its shares to public for the first time
is known as?
a. Public Offering
b. Corporate Action
c. Underwriting
d. Initial Public Offering
e. None of the listed Options
34 3 Marks
Not all possible services that might be provided by the auditing firm are expressly
prohibited by Sarbanes-Oxley. If a non-audit service is not expressly prohibited, the
auditing firm may provide that service ___________________________
Answer:
a. If no one on the board objects.
b. If the audit committee gives its prior approval.
c. Only in an emergency and only if the company being audited has not been able to find
another accounting firm to provide this service after making a good-faith effort.
d. Without any prohibitions or pre-conditions whatsoever.
e. None of the listed Options.
35 1 Marks
The performance of an internationally diversified portfolio may be affected by
________________________.

Answer:
a. currency selection
b. country selection
c. stock selection
d.All of the listed options
e. None of the listed Options
36 1 Marks
Primary markets ____________________
Answer:
a. are markets in which primary goods and service, i.e. raw materials are traded.
b. are markets in which short-term debt is traded.
c. are markets in which claims that have already been issued are sold by one investor to
another.
d. are markets in which newly issued claims are sold to initial buyers.
e. are markets in which shares are actively traded.
37 3 Marks
What does the Federal Reserve Supervisory Letter define private banking as?
Answer:
a. personalized services such as money management, financial advice, and
investment services for high net worth clients
b. personalized services such as cheque collection and other retail banking services for
high net worth clients
c. service provided by private banks to all clients
d. personalized services provided by private and public banks to all clients
e. None of the listed Options
38 1 Marks
The term PTA refers to ______________________.
Answer:
a. Permission to Act
b. Payable Through Automated Means
c. Payment To Automate
d. Payable Through Account
e. None of the listed Options
39 1 Marks
The city of Basel is located in which country?
Answer:
a. USA
b. India
c. Japan
d. UK
e. Switzerland

40 1 Marks
Inflation represents which of the following?
Answer:
a. Increase in prices
b. Decrease in prices
c. Very high change in prices
d. Economic crisis
e. Currency crisis
41 1 Marks
Financial intermediaries exist because small investors cannot efficiently
________________________.
Answer:
a. gather information
b. advertise for needed investments
c. monitor their portfolios
d. diversify their portfolios
e. All of the listed options
42 1 Marks
Which is not a banking account?
Answer:
a. Checking Accounts
b. Money Market Deposit Accounts
c. Demat Account
d. Time Deposits
e. None of the listed Options
43 1 Marks
Pick the odd one out.
Answer:
a. Warren Buffet
b. Peter Lynch
c. George Soros
d. Sachin Tendulkar
e. Rakesh Jhunjhunwala
44 1 Marks
In a economy where inflation is 5%, future value of 100 units of money after 1 year
would be which of the following?
a. More than 100
b.Less than 100
c. Exactly 100
d. 105, as inflation is 5%
e. None of the listed Options

45 2 Marks
What term is used to describe an LC that remains valid for years thereby eliminating the
cost of separate LCs for each transaction with a regular client?
Answer:
a. Evergreen Clause
b. Red Clause
c. Irrevocable LC
d. Transferable LC
e. None of the listed Options
46 2 Marks
When the Central Bank of a country decides to change the interest rates, it is a
manifestation of which of the following?
Answer:
a. Money Policy
b. Money Market
c. Money Multiplier Effect
d. Monetary Policy
e. Money making
47 3 Marks
Which of the following is not a rating agency?
Answer:
a. S&P
b. Reserve Bank of India
c. Moody's
d. Fitch
e. Crisil
48 2 Marks
When you deposit $200 in currency into your bank _________________
Answer:
a. its assets decline by $200.
b. its reserves decline by $200.
c.its liabilities increase by $200.
d. each of the above occur.
e. its assets decline by $200 and its reserves decline by $200.
49 1 Marks
Trade Finance helps in ________________________________.
Answer:
a. Facilitating International transactions
b. Facilitating intra-compamy transactions
c. Facilitating corpoate lending
d. Facilitating setting up of new factories

e. Facilitating International transactions,Facilitating corpoate lending and Facilitating

setting up of new factories
50 2 Marks
Bank of America charges a lower rate of interest to Lockheed Martin than to General
Electric.
This can be attributed to lower ________ risk from Lockheed as compared to GE for
Bank of America.
Answer:
a. Market Risk
b. Credit Risk
c. Liquidity Risk
d. Legal Risk
e. None of the listed Options
51 1 Marks
&quot;Don't put all your eggs in one basket&quot; is a phrase used to describe which of
the following?
a. risk averse
b.diversification
c. risk/return tradeoff
d. time value of money
e. budgeting
52 1 Marks
Pick the odd one out.
Answer:
a. Visa
b. Mastercard
c. Amex
d. Discover
e. HSBC Bank
53 1 Marks
Which of the following is not likely to be an electronic banking function?
Answer:
a. Direct Debit
b. Standing Order
c. Standing Instruction
d.Account opening
e. Wire transfer
54 1 Marks
Which division provides services to High Net Worth individuals?
Answer:
a. Corporate banking

b. Investment banking
c. Retail banking
d. Private banking
e. None of the listed Options
55 1 Marks
Which term refers to securities that are sold by the issuer to investors?
Answer:
a. Secondary Offering
b. Outright Sale
c. Primary Offering
d. Select Sale
e. None of the listed Options
56 2 Marks
A bank that is earning 7% on its earning assets and is paying 4% on its interest-earning
liabilities is said to __________________
Answer:
a. have a negative spread.
b. have a positive GAP position.
c. have a positive spread.
d. will always have positive net earnings.
e. both have a negative spread and will always have positive net earnings.
57 1 Marks
Due Diligence is performed to ____________________________________.
Answer:
a. assess the risk
b. performed by the buyer
c. performed on the seller
d. executed after contract is signed
e. All of the listed options
58 1 Marks
______________ preauthorizes banks to pay recurring bills like insurance premium,
utility bills automatically.
a. Pay-by-Phone System
b. EFT
c. Direct Debit
d. Direct Credit
e. Direct Deposit
59 1 Marks

BankNew has a portfolio of $30 million worth of loans, which it wants to hedge. This is
an example of what kind of drawn loans?
Answer:
a. Accrual Loans
b. Trading Loans
c. Held for Sale Loans
d. Undrawn Loan
e. Committed Loans
60 3 Marks
Regulatory balance sheet restrictions are designed to _________________
Answer:
a. limit the size of depository institutions.
b. limit risk-taking and to encourage diversification.
c. limit excessive diversification.
d. to promote Universal Banking.
e. encourage high risk-taking by proper diversification.
61 3 Marks
Capital adequacy ratio refers to ___________________________.
Answer:
a. Amount of banks capital expressed as percentage of the risk weighted credit exposure
b. Amount of banks capital expressed as percentage of the risk weighted credit exposure
& operational risk
c. Amount of banks capital expressed as percentage of the risk weighted credit exposure,
& market risk
d. Amount of banks capital expressed as percentage of the risk weighted credit
exposure, operational risk & market risk
e. None of the listed Options
62 The term CP is used in Corporate Lending for ___________________________.
Answer:
a. Client Partner
b. Credit Provision
c. Commercial Paper
d. Collateral Provision
e. Commodity Put Option
63 1 Marks
Dealer in broking parlance refers to which one of the following?
Answer:
a. Employee of stock exchange
b. Matches customer orders with other brokers
c. Acts as a Principal and executes trades for his/her personal account
d. Only person authorized to buy or sell a particular stock
e. Charges commission for trades

64 1 Marks
Pick the odd one out with respect to Private Banking services.
Answer:
a. Switzerland
b. Luxembourg
c. Caymen Islands
d. Mumbai
e. Mauritius
65 Why do we need banks?
Answer:
a. Banks are in the best position to lend out money at competitive rates to businesses and
individuals
b. Deposits are participants in primary and secondary markets
c. Banks are in the best position to lend out money at competitive rates to businesses and
individuals
d. Small investors are protected, hence it is a low risk investment avenue
e. All of the listed options
66 The key feature of letter of credit is ________________________________________.
Answer:
a. basis for devising proper currency hedging strategy
b. distributes risk between buyer and seller
c. opportunity to receive payment in advance of the due date
d. basis for devising proper currency hedging strategy and Opportunity to receive
payment in advance of the due date
e. All of the listed options
67 Which of the following is not a function of a Custodian?
Answer:
a. Core Custody
b. Asset Servicing
c. Corporate Lending
d. Securities Lending
e. Corporate Actions
68 1 Marks
The treasury services department performs all of the following functions EXCEPT
___________________________.
Answer:
a. Research market factors e.g., Interest rate monitoring
b. Managing corporate collections and payments
c. Managing liquidity and cash position
d. Risk Management services
e.None of the listed Options

69 1 Marks
Which of the following is not covered under retail operations of a Bank?
Answer:
a. Loan for Consumer durables
b. Hire Purchase
c. Bill Discounting
d. Lease
e. Auto Loans
70 IRR stands for which of the following?
Answer:
a. International Rate of Malaysian Ringit
b. International Rating of Rwanda
c. Internal Rate of Return
d. Indian Rate of Return
e. International Rate of Return
71 3 Marks
Inter District Settlement Fund is a _____________.
Answer:
a. Fund Transfer System
b. Electronic Bill Presentment System
c. Settlement Account
d. Booking System
e. Transaction System
72 Following are the list of risks that Cognizant faces at an organization level EXCEPT
______________________________________.
Answer:
a. Exchange rate fluctuation
b. Protective legislation by U.S/U.K
c. Attrition
d. Payment default
e. Cognizant faces all of the risks mentioned in the listed options
73 1 Marks
Which of the following is not a Retail Banking service?
Answer:
a. Current accounts
b. Savings accounts
c. Cheque book facility
d. Investment advice
e. ATM facility
74 Warrants are the combination of which of these instruments?
Answer:

a. Equities and Call Options

b. Call and Put Options
c. Equities and Futures
d. Cash and Call Options
e. Put Options and Swaps
75 1 Marks
Core Custody Services performs the following functions except
________________________.
Answer:
a. Price securities positions
b. Record Keeping
c. NAV calculation
d. Reporting services
e. Processes corporate actions
76 What is the key regulatory authority over the American securities industry?
Answer:
a. Federal Reserve
b. FDIC
c. DTCC
d. ASA
e. Securities Exchange Commission
77 After a buyer and a seller enter into a trade agreement, who initiates the issue of LC?
Answer:
a. Seller
b. Seller's bank
c. Buyer's bank
d. *Buyer
e. None of the listed Options
78 Which of the following is a foreign bank not operating in India as a retail bank?
Answer:
a. Citibank
b. HSBC
c. JP Morgan Chase
d. Standard Chartered
e. ABN Amro
79 Legal risk is the __________________________________________.
Answer:
a. possibility that you will face legal action
b. loss you could incur when legal action is taken against you
c. possibility of loss when a contract cannot be enforced
d. possibility of loss from errors in instructing payments or settling transactions

e. None of the listed Options

80 The term EMI stands for which of the following?
Answer:
a. Equal Monthly Income
b. Equalised Monetary Installments
c. Equated Money Inflow
d. European Monetary Inflows
e. Equated Monthly Installments
81 Which of the following are involved in the mortgage business in US?
Answer:
a. Ginnie Mae
b. Fannie Mae
c. Both Ginnie Mae and Fannie Mae
d. Sallie Mae
e. Federal Reserve
82 In Banking , the term LIBOR stands for?
Answer:
a. Limited Borrowing
b. Limited International Banking Operations
c. London Interbank Offered Rate
d. Lending to International Borrowers
e. None of the listed Options
83 Loss of which of the following type of cards can cause the maximum financial impact
for the customer?
a. Debit Card
b. ATM Card
c. Stored Card
d. Gift Voucher
e. Any of the listed options
84 Individual investors are most likely to trade securities in
________________________.
Answer:
a. Forex market
b.Money Market
c. Stock Market
d. Mortgage Market
e. New York
85 A share represents __________________.
Answer:
a. ownership in a company

b. right to vote in important matters of the company

c. an instrument whose value might appreciate in secondary market
d. an instrument which can potentially earn dividends
e. All of the listed options
86 Cash management techniques include ____________________________________.
Answer:
a. Pooling
b. Netting
c. Swapping
d. Both Pooling and Netting
e. Pooling, Netting and Swapping
87 A very effective way to employ a passive strategy is to
_____________________________.
Answer:
a. invest in an indexed portfolio
b. buy all Stocks on the index
c. invest money in a bank
d. buy few securities which reflect the index
e. both invest money in a bank and buy few securities which reflect the index
88 In context of Treasury services, FRA stands for which of the following?
Answer:
a. Frivolous Rate Agreement
b. Forward Rate Agreement
c. Free Rate Agreement
d. Factored Rate Agreement
e. Forfeited Rate Agreement
89 Which of the following is not associated with debt?
Answer:
a. Coroprate Bonds
b. Debentures
c. Shares
d. Loans
e. Government Bonds
90 Electronic banking doesnt covers the following services.
Answer:
a. Pay-by Phone system
b. ATM System
c. Point of Sale system
d. Internet payment
e. Address check for verification of a loan application
91 Which kind of an investor should choose to invest in Money Market Securities?

Answer:
a. Investor looking for capital gains
b. Investor looking for liquidity
c. Arbitrageur
d. Investor looking for regular income
e. None of the listed Options
92 SWIFT is a ______________________.
Answer:
a. Proprietary network interface
b. Open standard network interface
c. Message based network interface
d. Both open standard network interface AND message based network interface
e. Both proprietary network interface & message based network interface
93 Two Financial Institutions A &amp; B conducted the following transactions over
CHIPS on 30th Jan 2004.A transferred $5m to B at 9:45 AM B transferred $10m to A at
11:30 AM A transferred $12m to B at 2PM B transferred $15m to A at 3:30PM Which of
the following holds true?
Answer:
a. At the end of the day, $17m will be transferred to B
b. *At the end of the day, $25m will be transferred to A
c. At the end of the day, $8m will be transferred to A
d. All the transactions would settle individually real-time
e. Both, at the end of the day, $17m will be transferred to B AND at the end of the
day, $25m will be transferred to A
94 Research analysts do all of the following except ____________________.
Answer:
a. Follow stocks
b. Follow bonds
c. Invest of behalf of the Investment Bank
d. Make buy / sell recommendations
e. Collect and analyse data on stocks and bonds
95 Which of the following is not a repayment method?
Answer:
a. Post dated checks
b. Salary deductions
c. Direct receipts
d. Direct debits
e. All of the listed options are repayment methods
96 Coupon rate on a bond represents which of the following?
Answer:

a. Face value of the bond

b. Maturity duration of the bond
c. Credit rating of the bond
d. Interest paid to the bondholders
e. Financial performance of the bond issuer
97 Which of the following is not a characteristic of money markets?
Answer
a. They trade in a central location.
b. They have an active secondary market.
c. They are wholesale markets.
d. They are beyond the reach of small investors.
e. They trade in short term instruments.
98 VaR is used for which of the following?
Answer:
a. Risk Measurement
b. Risk Mitigation
c. Risk Taking
d. Risk Assumption
e. None of the listed Options
99 The Japanese Index is known as?
Answer:
a. Straits Times
b. Nikkei
c. Footsie
d. DAX
e. CAC
100 Which of the following is the most profitable for Credit Card Company?
Answer:
a. Customers who always pay in time
b. Customers who never pay
c. Customers who default but finally pay
d. All of the listed options
e. None of the listed Options